Starboard Value Cuts Stake in RealD (RLD), Stadium Capital Buys More of This Retailer, Plus 2 Other Moves

The handful of hedge fund managers who have a strong record of outperforming broader market benchmarks do not manage capital for the masses. The 2-and-20 fee structure makes it really expensive for individual investors to put their money into hedge funds, but investors can at least imitate the smart money by tracking their moves. Of course, one does not get to see the full picture of funds’ portfolios by analyzing their 13Fs or other filings, but it is possible to make money by mimicking hedge funds’ long-only positions. Truth be told, I would not suggest anyone blindly follow hedge funds’ moves, as individual investors need to develop their own investment hypotheses. But tracking hedge funds’ moves can be very handy while seeking out high-potential investing opportunities. For that reason, this article will discuss four filings submitted by Jeffrey Smith of Starboard Value LP, Nathaniel August of Mangrove Partners, and other hedge fund managers.

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According to a freshly-amended 13D filing, Scopia Capital Management LP, founded by Matt Sirovich and Jeremy Mindich, currently owns 3.61 million shares of Itron Inc. (NASDAQ:ITRI), which account for 9.5% of the company’s outstanding shares. This compares to the 3.26 million-share stake revealed in mid-December through the fund’s most recently amended 13D filing on the company. Let us remind you that Scopia Management and Jerome J. Lande and Craig Rosenblum’s Coppersmith Capital Management teamed up in September 2015 to launch an activist campaign against the technology and services company. In December 2015, the company announced an agreement with the two investment firms, under which Jerome Lande and Peter Mainz, the latter a candidate identified by Coppersmith, were appointed to the Board of Directors, effective beginning in 2016. Earlier this week, Scopia and Coppersmith announced that both Jerome J. Lande and Craig Rosenblum are set to join Scopia Management in the upcoming months.

The technology company that provides end-to-end smart metering solutions to electric, natural gas, and water utilities has seen its shares decline by 15% over the past 12 months. Itron Inc. (NASDAQ:ITRI) generated revenue of $1.4 billion during the first nine months of 2015, compared to $1.5 billion reported for the same period of the prior year. The currency exchange fluctuations impacted the company’s top-line results quite significantly, considering that Itron’s revenue on a constant currency basis increased by $66.7 million year-over-year. Wall Street analysts anticipate that the company will deliver earnings per share of $2.16 in fiscal year 2016, which provides the stock a forward price-to-earnings multiple of 14.60 (compared to the 15.38 ratio for the S&P 500 Index). There were 16 hedge funds tracked by Insider Monkey with positions in Itron at the end of the third quarter, which amassed over 16% of the company’s shares. Glenn J. Krevlin’s Glenhill Advisors acquired a 309,000-share stake in Itron Inc. (NASDAQ:ITRI) during the September quarter.

Let’s move on to the next pages of this article, where we discuss three other filings recently submitted with the SEC.

As revealed by a 13D filing, Starboard Value LP is no longer a beneficial owner of more than 5% of RealD (NYSE:RLD)’s shares, as of January 26, 2016. The newly-amended filing discloses an ownership stake of 2.55 million shares, which make up 4.97% of the company’s outstanding common stock. The widely-known hedge fund firm owned 4.95 million shares of the licensor of 3D and other visual technologies at the end of September. In November 2015, the company agreed to be bought by Rizvi Traverse Management LLC for $11 per share in cash. The proposed buyout is anticipated to be completed in or shortly after the company’s fourth quarter of fiscal year 2016 that ends March 31. RealD (NYSE:RLD)’s management believes that its 3D cinema business has already matured in many markets, including the United States, while the 3D box office performance of certain motion pictures has been impacted by fast-changing consumer preferences. With expectations of slowing equipment installations, the aforementioned deal might appear to be an appropriate move. However, some tend to believe that the deal was priced much too low, considering that at least one Wall Street analyst has a price target of $16.00 per share on the stock. A total of 16 smart money investors from our system had stakes in the company at the end of the third quarter, stockpiling nearly 36% of its outstanding shares. Brett Hendrickson’s Nokomis Capital owned 1.79 million shares of RealD (NYSE:RLD) on September 30.

In a Schedule 13G filing, Alexander M. Seaver’s Stadium Capital Management LLC reported owning 11.23 million shares of Ascena Retail Group Inc. (NASDAQ:ASNA), which constitute 5.7% of the company’s total shares. This marks an increase of 3.33 million shares from the stake revealed through the fund’s 13F for the September quarter. The shares of the specialty retailer of apparel for women and tween girls are down by 36% over the past year. Earlier this month, the company revealed that its comparable store sales for the Holiday period (November 21, 2015 through January 3, 2016) decreased by 4% year-over-year, which has put significant weight on the stock. In light of that, what has prompted Stadium Capital to purchase more shares of the apparel retailer? By solely relying on P/E multiples, one could argue that Ascena Retail Group Inc. (NASDAQ:ASNA) represents an attractive long-term bet. The stock trades at a forward P/E of 7.81, so investors could put their faith in analysts’ earnings estimates and go long the stock. In August 2015, the company purchased ANN Inc., a retailer of women’s apparel whose products are mainly sold under the Ann Taylor and LOFT brands, for roughly $2.1 billion. 23 hedge funds from our system were invested in Ascena at the end of the third quarter, owning 17% of the company’s outstanding shares. Joel Greenblatt’s Gotham Asset Management reported owning 2.66 million shares of Ascena Retail Group Inc. (NASDAQ:ASNA) via its 13F for the September quarter.

As disclosed by a Form 4 filing, Mangrove Partners purchased 262,712 shares of SunCoke Energy Inc. (NYSE:SXC) on Wednesday at a weighted average cost of $2.35, and currently owns 7.63 million shares. The investment firm initiated a position in the producer of coke during the September quarter and has been gradually piling up more shares, as revealed by numerous Form 4 filings discussed by Insider Monkey. According to the fund’s initial 13D filed on the company at the end of December 2015, which revealed a stake of 6.63 million shares, Mangrove Partners believes SunCoke’s shares are undervalued and represent an attractive investment opportunity. The freshly-upped stake accounts for 11.92% of the company’s outstanding common stock.

On January 28, the operator of five cokemaking facilities in the nation and one facility in Brazil released its fourth-quarter earnings report, which was very well received by the market. The stock closed 52% in the green on Thursday, though it is still down by 76% over the past year. The company’s fourth-quarter net income totaled $19.0 million, compared to a quarterly loss of $65.5 million reported a year ago. SunCoke Energy Inc. (NYSE:SXC)’s top-line results reached $1.36 billion for 2015, down from $1.50 billion reported for 2014. Despite experiencing a substantial decline in revenue, the company managed to reduce its full-year loss to $22.0 million, down from $126.1 million reported for 2014. 35 hedge funds monitored by our team had SunCoke Energy in their portfolios at the end of the third quarter, including Richard Rubin’s Hawkeye Capital, which held a 1.15 million-share position in SunCoke Energy Inc. (NYSE:SXC) at the end of September.

Disclosure: None